Solectron to Cut 8,200 Jobs, Lowers Third-Quarter Guidance

Solectron (SLR) said Monday that it beat Wall Street's earnings projections by a penny for the fiscal second quarter, but the electronics contract manufacturer set plans to cut about 8,200 jobs.

Additionally, the company lowered its guidance for the third fiscal quarter. Solectron said it earned 30 cents a diluted share in the latest second quarter, up from 19 cents in the year-ago period. Twenty-five analysts polled by First Call/Thomson Financial were calling for the company to earn 29 cents in the quarter, an estimate that was recently lowered by a penny.

Revenue for the quarter rose to $5.4 billion, up 85.5% from the year-ago period.

"Changing economic conditions overall led to a significant reduction in demand from our customers as we moved through the quarter,'' the company said in a statement. "Unfortunately, with significantly lower customer demand we are unable to support our recent levels of employment, and we have been reducing our workforce at many sites."

Solectron expects to take a $300 million to $400 million charge in the third quarter to restructure additional facilities during the next 12 months. The charge will cover expenses associated with the job cuts, the company said. The company's workforce stood at 79,000 worldwide at the end of the second quarter. Many of the job reductions have taken place in the last two weeks, the company said.

The company expects sales of $4.1 billion to $4.5 billion in the third quarter, with earnings of 12 cents to 16 cents a share, excluding amortization and other intangible items. The current consensus estimate is 31 cents for the period. The company said it wouldn't give fourth quarter guidance at this time.

Shares of Solectron, which is based in Milpitas, Calif. gained $1.39, or 6.9%, to $21.49 in New York Stock Exchange trading, but dropped to $19.50 in after-hours Instinet action, where it was the most actively traded issue.

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